iFAB 2013 BEVERAGES REVIEW

January 2014 v1.00

iFAB 2013 The Food and Beverage Information Project What is the purpose of the food and beverage information iFAB 2013 The Food & Beverage Information Project is the first project? comprehensive overview of the state of New Zealand’s Food & Beverage (F&B) industry. Part of the Government’s Business The project pulls together the available information on the food Growth Agenda (BGA), it is an integrated programme of work and beverage industry into one place, in a form which is familiar focusing on the six key inputs businesses need to succeed, grow and useful to business. The reports contain analysis and and add jobs; export markets, capital markets, innovation, skilled interpretation of trends and opportunities to materially assist and safe workplaces, natural resources and infrastructure. with business strategy and government policy.

Essentially, the BGA Export Markets goal will require lifting the The information will be of vital use to businesses, investors, ratio of exports from today’s rate of 30% of GDP to 40% by government, and research institutions as the industry expands 2025. This equates to doubling exports in real terms (or tripling and diversifies. This industry view will be very useful to exports in nominal non-inflation adjusted terms). This in turn government, enabling better dialogue and the opportunity to equates to achieving a 7% per annum growth rate over the next address issues collectively. twelve years. What benefit will this bring to businesses? This five-year project analyses the main sectors in F&B, including dairy, meat, seafood, produce, processed foods, and beverages, The Project will have many uses for businesses. These include: as well as providing an overview of how the industry is fairing in our major markets. It also conducts in-depth sector reviews on a – As a base of market intelligence to enable business to be rotating basis. The information is updated annually and feedback much more targeted in their own market research from users shows the project is acting as a vital tool for – Reviewing and informing offshore market development companies looking to expand and grow exports. (including export and investment) strategies – Assisting in identifying areas of innovation and R&D for Why Food & Beverage? the future – Identifying strategic partners and collaborators The Food & Beverage industry is vitally important to the New – Enabling a company to benchmark performance with that Zealand economy. Food & Beverage accounts for 56% of our of its competitors merchandise trade exports and one in five jobs across the wider – Monitoring industry activity value chain. In addition, F&B acts as a vital ambassador for the – Gaining a better understanding of their own industry country, being in most cases the first exposure global consumers sector get to “Brand New Zealand.” – Identifying internal capability needs or external inputs

New Zealand’s F&B exports are growing strongly and the How will government use the reports? country’s export performance is strong and improving relative to peers. In the 15 years leading up to 2010, New Zealand's food and This information will provide much greater insight into the beverage exports grew at a compound annual rate of 7% per industry, which is useful for a range of policy development, from annum. So one way to look at the challenge is to ask – can we regulatory frameworks to investment in science and skills and continue to grow our food & beverage exports at the same rate? facilitating access to international markets. In particular, a single To understand if this is possible we need to know what has been source of factual information will enable government agencies to driving our success. better coordinate their efforts across the system and be more responsive to addressing industry issues. OTHER RELATED iFAB REPORTS iFAB 2013 This analysis of the New Zealand beverages sector forms a part of the wider Food & Beverage Information Project

Other reports, including those from previous years, are available on the MBIE or Coriolis website…

http://www.med.govt.nz/sectors-industries/food-beverage/information-project/ http://www.coriolisresearch.com/reports/

3 NOTE ON DEFINITIONS iFAB 2013 The iFAB project splits the total New Zealand food & beverage industry into six separate sectors; to avoid double counting, products and firms are only defined and counted in one; some firms may be in another report “NOT SUBSTANTIALLY TRANSFORMED” “SUBSTANTIALLY TRANSFORMED”

DEFINED AS DAIRY, MEAT, SEAFOOD DEFINED AS PROCESSED FOODS DEFINED AS BEVERAGES OR PRODUCE WHAT: Whole or minimally transformed WHAT: Products made from a mixture or WHAT: Juice, fermented or not, made from a products; typically one single predominant combination of ingredients, rather a single single fruit or vegetable or a mixture or ingredient; firms that predominantly pack these ingredient; firms that predominantly make these combination of ingredients; water products products Ingredients: Reconstituted vegetable juice blend (water and concentrated Ingredients: Concentrated Tomatoes, juices of tomatoes, carrots, celery, beets, Tomatoes Sugar, Salt, Concentrated White Vinegar, parsley, lettuce, watercress, spinach), Food Acid (Citric Acid), Natural Flavours contains less than 2% of: salt, vitamin c (Contains Garlic), Spices (ascorbic acid), natural flavoring, citric acid, natural flavor. EXAMPLES: Kiwifruit, milk powder, frozen beef EXAMPLES: Chocolate, ice cream, sauce EXAMPLES: Wine, soft drinks

TRADE CODES: Primarily classified in the global TRADE CODES: Primarily classified in the global TRADE CODES: Classified in the global HS trade HS trade codes as HS02-15 HS trade codes as HS 16-21 codes as HS22/2009 EXAMPLE FIRMS: EXAMPLE FIRMS: EXAMPLE FIRMS:

SEE RELATED REPORTS SEE RELATED REPORT THIS REPORT

4 iFAB 2013 BENCHMARK – EXPORT GROWTH BY SECTOR iFAB 2013 In 2012 beverages were the fastest growing core food & beverage super-category in absolute dollars and third fastest in percent terms

ANNUAL CHANGE IN EXPORT VALUE BY TYPE PERCENT CHANGE IN EXPORT VALUE BY TYPE US$; million; 2012 vs. 2011 %; US$; 2012 vs. 2011

CORE F&B CATEGORIES

Beverage $117 Other Foods 23%

Processed Food $66 Pet & Animal Foods 14%

Seafood $51 Beverage 10%

Pet & Animal Foods $35 Seafood 4%

Other Foods $35 Processed Food 4%

Dairy -$23 Net Dairy 0% Core F&B +$67m Produce -$36 Produce -2%

Meat -$180 Meat -4%

F&B RELATED CATEGORIES

Seed for sowing $30 Fertilisers 57%

Live Animals $27 Tobacco 48%

Tobacco $16 Supplements 33%

Supplements $3 Seed for sowing 28%

Fertilisers $3 Live Animals 15%

HBC/Household -$2 HBC/Household -1% Net Pharmaceuticals -$7 Related F&B Pharmaceuticals -3% +$70m

Source: UN Comtrade database; Coriolis classification and analysis 6 BEVERAGES – WINE – SITUATION iFAB 2013 The wine industry has shown rapid growth driven by Marlborough Sauvignon Blanc; further diversification into new varieties and new regions should occur going forward

New Zealand wine Competitors The New Zealand wine industry has achieved spectacular growth over New Zealand wine competes directly with other premium temperate the last 40 years, going from NZ£51 in exports in 1960 to NZ$1.2b in climate countries. Key competitors include France, Germany, cooler 2012. Today New Zealand competes successfully with major wine parts of the US (e.g. Oregon) and Chile. producers, both old world (e.g. France, Germany) and new (e.g. Australia). New Zealand has achieved an overall premium price position in–market on par with France (which has been producing wine Consumers/Markets for ~2,000 years). Global Financial Crisis (GFC) depressed global demand, pushing down International success to date has been built almost exclusively on prices. These falling prices have impacted New Zealand wines. Marlborough Sauvignon Blanc which has become a “must-have” wine for major wine players. However good Marlborough wine area is now At the same time wine consumption is declining in many EU markets almost all used. This may be a good thing as Marlborough now has (France, Italy, Spain) for social, lifestyle and economic reasons. These almost as much area as Burgundy in grapes. twin forces, falling consumption and falling prices, have in turn triggered a decrease in global wine area and production, particularly in Emergent secondary regions are 20 years behind Marlborough in the three largest wine producers (France, Italy & Spain). On-going terms of development. Hawkes Bay, Waipara and Central Otago changes to EU subsidy systems have accelerated the process. stand out as the next best prospects. However, other than Hawkes Bay/Gimblett Gravels Syrah, most regions have yet to find “their” New Zealand’s success to date in wine has been primarily in the wine and the experience of Europe suggest this could take some time. Anglo-Saxon 4 (USA, Canada, UK & AU). Luckily these markets have had stable-to-increasing consumption. However, New Zealand Wine production is a fast growing industry for New Zealand, with a producers need to work to decrease reliance on these markets. number of firms, ranging from very large to very small. Many large wineries are now foreign owned and on-going acquisitions are China is an emerging growth market for wine globally and is now the occurring. Foreign ownership now plays a big part in the wine industry, fourth largest wine consuming country in the world in total (not per and these global firms with their global sales resources and reach, capita) volume, nipping at the heels of Germany. China is now New provide a path-to-market for introducing global consumers to New Zealand’s #5 wine export destination and the fastest growing market Zealand wines. by value. However there is a large group of successful medium sized New Available in-market data suggests that the growth of New Zealand Zealand owned wineries that, in many ways, are the key force driving wine is at the expense of French wines (i.e. that the two are close industry quality and innovation forward (e.g. light wine development). substitutes to consumers).

GFC = Global Financial Crisis; Source: Interviews; Coriolis 7 BEVERAGES – WINE – SWOT ANALYSIS iFAB 2013 The New Zealand wine industry is well positioned for further growth, but pressures will continue

STRENGTHS WEAKNESSES

- Islands in the middle of the South Pacific the size of Italy but with only the - Large number of small wineries with low/no economies of scale population of Singapore; therefore relatively unspoilt - High debt levels of many small and medium sized wineries - Strong and growing success in premium/super-premium - Highly dependant on four countries (AU, UK, USA and Canada) - Achieves a strong price premium in key markets (similar to France) - Increasing exports of bulk wine - New Zealand Sauvignon Blanc now a “must have” for global wine companies - Lack strong super-premium heritage brands as demanded by brand and status - Growth in market share in key markets (e.g. USA) conscious Asian consumers - Innovative and quality-focused winemakers

OPPORTUNITIES ISSUES/THREATS/RISKS - Continued income growth in Asian markets - Growing consolidation of the wine industry - Continued growth of New Zealand wine consumption in China - Difficult finding good distributors to gain access into key markets - Low share in Europe (two thirds of global wine consumption) outside British Isles - Continued growth of bulk wine trade reducing the value of wine - Joint in-market activity spreading cost of marketing - Continued impact of GFC, reducing wine spend - Automated vineyard pruning technology reducing requirements for labour - Continued growth of retail brands/store brands in wine - Strong and growing demand in Asia for premium fortified wines/wine based spirits (e.g. cognac) - Reduction of global “wine ocean” supporting higher prices

Source: various company annual reports; various company websites; Interviews; Coriolis 8 BEVERAGES – OTHER BEVERAGES – SITUATION iFAB 2013 Outside wine, the New Zealand beverage sector is primarily focused on production for domestic consumption; however, exports are growing

Soft-drinks/Flavoured Beverages (7.7% of bev. exports by value) - There are a wide range of smaller/micro breweries Non-alcoholic beverages are a duopoly controlled by two international New Zealand is a minor beer exporter1, and imports more beer than it companies that primarily manufacture for domestic consumption: exports, driven in part by the foreign ownership of its two key breweries. However, beer exports have surged in the last few years - Coca-Cola Amatil, Australian-listed Asia-Pacific licensee of and hops is an exporter of specialty hops. Coca-Cola; Spirits (3.4% of beverage exports by value) - Frucor, former Apple & Pear Marketing Board juice business, now a division of Suntory (Japan); maker of V energy drink and Prior to 2000 there were a wide range of small spirit ventures, the Pepsi licensee in New Zealand. producing small scale niche spirits for the domestic market. At the 2 Smaller innovators emerging outside core soft-drinks. Organic- same time Independent Liquor launched RTD spirit beverages producer Phoenix (Charlie’s/TBDC) recently acquired by Asahi. primarily for domestic consumption and export to Australia. Everything changed with the launch, rapid growth and financial Juice (5.3% of beverage exports by value) success of 42 Below which created global awareness of NZ as a New Zealand exports apple and kiwifruit juice, primarily as a super-premium spirits provider. In the wake of 42 Below a large secondary product of the fresh fruit industry. However New Zealand number of new firms have entered the industry with a wide range of imports +20% more juice than it exports and domestic fruit products and brands. production cost structures suggest a premium/niche strategy. Independent Liquor, recently purchased by Asahi, is the largest player Beer (3.6% of beverage exports by value) in spirits. Independent initially developed its business around flavoured RTD2 drinks, however it is diversifying into other alcoholic Beer brewing has been a low growth duopoly controlled by two beverages. The two main brewers also produce and pack spirits, as international companies brewing for domestic consumption. well as distribute imported products and brands. Independent has recently entered the beer market and is gaining share. There are a range of other smaller firms in spirits achieving strong growth and the sector is well positioned for further growth (see - Lion, founded in New Zealand, owned by Kirin (Japan) related iFAB Spirits report). - DB Breweries (Ltd), founded in New Zealand, now owned by Water (0.6% of beverage exports by value) Heineken (Netherlands) New Zealand has excellent theoretical potential to produce and - Independent Liquor, founded in NZ, owned by Asahi (Japan) export premium bottled water. However, to date, it has realised very little of this potential despite 30 years of trying. 1. Mexico, for example, exports 80x as much beer as New Zealand; NZ currently exports about as much beer as the Dominican Republic; 2. RTD = ready-to-drink 9 BEVERAGES – NON-WINE – SWOT ANALYSIS iFAB 2013 New Zealand is currently well positioned for further growth in premium non-wine beverages

STRENGTHS WEAKNESSES

- Islands in the middle of the South Pacific the size of Italy but with only the - No deep cultural unique “spirits” associated with New Zealand population of Singapore; therefore relatively unspoilt - Long shipping distance to traditional western markets - Closer shipping distances to Asia compared to European competitors - No large New Zealand owned champion growing and driving New Zealand brand - Demonstrated capabilities in beverage production position in beverages - On-going growth and success of Frucor/V, and Charlies/Phoenix in non-alcoholic - Limited culture or mentality of super-premium branding or positioning (e.g. relative drinks category to France) - Emergent success in spirits (e.g VoC and 42Below) - Not a major producer of many base ingredients of typical beverages (e.g. oranges)

OPPORTUNITIES ISSUES/THREATS/RISKS - Leverage success of New Zealand wine industry; build on awareness of New - Limited opportunity shipping “water” around the world if it isn’t a premium product Zealand in wider premium beverages segments - Changing consumer sentiment (e.g. bottled water backlash) - Wide range of New Zealand unique plants available as flavouring (e.g. 42 Below - Failure to achieve large scale export traction outside wine Manuka honey) - Hollowing out of management skills in New Zealand industry due to foreign - Rapidly growing demand for premium alcoholic beverages in Asia ownership

Source: various company annual reports; various company websites; Interviews; Coriolis 10 BEVERAGES – POTENTIAL AREAS FOR INVESTMENT iFAB 2013 Alcoholic beverages are a major opportunity for investors; wine has shown rapid growth; opportunities exist in second tier wine regions, cider, developing a premium spirits category and other beverages

Wine (78% of beverage exports by value) brewing experience. After a long period of flat exports, beer exports New Zealand Sauvignon Blanc wine is now a “must-have” component have recently started growing. However - to date and despite years of of the portfolio for major global wine companies. Three of the top five trying - there is no major revealed demand for New Zealand beer in US wine companies and three of the largest European alcoholic any market other than Australia (96% of exports by value), except as beverage companies are in New Zealand. In addition, three of the top “yet another niche brand.” Microbreweries are small and growing, but five Australian wine companies are in New Zealand. most are primarily domestic focused. However, Moa Breweries has listed on the NZX and is making an export push. Future export success by New Zealand beer will require a unique/differentiated There are some opportunities for further investment in Marlborough. product (as was the case with wine). However, future area growth of Marlborough limited due to geographical constraints. Spirits (3.4% of beverage exports by value)

New Zealand has clear potential in premium alcoholic beverages, Large wine firms are either foreign owned by global majors or building, in part, on New Zealand positioning in premium wine. Peer committed NZ family owners (i.e. Delegat and Villa Maria both have group countries (e.g. Ireland) suggest strong future growth possible. committed owners). Opportunities exist for new investment in next However, there are limited entry vehicles. At this point in the life tier down of firms (e.g. Giesen, Lawsons Dry Hills, Chard Farm, Allan cycle, opportunities exist for start-ups into the space. Greenfields by Scott, Coopers Creek, Kumeu River etc.). However these firms are global player with a strong transferrable skill set also suits. looking for smart investment that gives them access to a global salesforce and a route to market. Cider (1.1% of beverage exports by value) Investors with transferrable skills or those looking to unlock hidden New Zealand is a major apple producer and exporter. Recently the value should investigate emergent secondary regions (i.e. “the next cider industry in New Zealand has experienced strong growth, both Marlborough”). for domestic consumption and export. Exports have shown strong growth over the past decade, almost exclusively to Australia (96%). While there are a large number of producers, most export volume is Soft drinks (7.7% of bev. exports by value) produced by the two main brewers (Heineken/DB & Kirin/Lion). In soft drinks, while both Frucor/V and Charlie’s/Phoenix are attractive, but both recently changed hands for top dollars. Both are Water (0.6% of beverage exports by value) now Japanese owned. Limited opportunities in exporting bottled water. At this late point in the global life-cycle, meaningful success will require global best Beer (3.6% of beverage exports by value) practice marketing (cf. Lynda Rae Resnick). Best fit would be for New Zealand produces hops and barley and has ~150+ years of beer investor with transferrable capability.

11 BEVERAGES – SUPPLY CHAIN iFAB 2013 Beverages have a relatively simple supply chain

SIMPLIFIED MODEL OF NEW ZEALAND BEVERAGE SUPPLY CHAIN (model; ANZSIC codes as available))

Domestic Imported Grocery Supermarkets market beverages wholesale & other retail (F360-100)

Apple/pear Soft drink Distributor Liquor growing manufacturing wholesaler specialists (A013-400) (C121-100)

Other fruit Cider Liquor/tobacco1 Hospitality/ growing manufacturing wholesale Foodservice (rem. A013) (F360-600)

Hops/other Beer ingredients/ manufacturing imports (C121-200)

Spirit Seafreight Beverage/liquor Supermarkets manufacturing Airfreight wholesale2 & other retail (C121-300) (in-market)

Grape Wine making Hospitality/ growing (C121-400) Foodservice (A013-100) International markets

1. Tobacco inseparable at source; 2. There may be one or more layers of wholesaling, depending on product or market; some wholesale functions may be captive inside retailers or foodservice operators; Source: Coriolis 12 iFAB 2013 GLOBAL WINE PRODUCTION iFAB 2013 The global surplus (the European “wine lake”) is falling as the decline of global wine production meets rising consumption

GLOBAL GRAPE AREA (ALL USES) 50 YEAR GLOBAL WINE PRODUCTION Hectares; millions; 1961-2011 Litres; millions; 1961-2011 10 40 9 35 8 7 UN FAO 30 UN FAO 6 25 OIV

5 20 4 15 3 10 2 1 5 - - 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

50 YEAR GLOBAL WINE PRODUCTION PER CAPITA GLOBAL WINE PER CAPITA PRODUCTION VS. CONSUMPTION Litres/person; 1961-2011 Litres/person; 1961-2011 35 10 9 30 8 50y Global surplus Production (OIV) 7 CAGR 25 -1% Consumption (OIV) 6 20 5 UN FAO 4 15 3 2 10 1 5 - 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: UN FAO AgStat database; OIV “Statistical report on world vitiviniculture 2013”; Coriolis analysis 14 GLOBAL WINE PRODUCTION BY REGION iFAB 2013 Global wine production growing outside Europe, driven by East Asia (particularly China) and Australasia; New Zealand produces 0.6% of global wine

GLOBAL WINE PRODUCTION BY KEY COUNTRIES & REGION 51 YEAR WINE PRODUCTION BY REGION Tonnes; millions; 2012 or as available Litres; millions; 1961-2012

31.6 51y Greece 0.7 CAGR Portugal 0.3 0.40.2 - 50y 0.3 1% 28.8 0.3% 1% CAGR 0.6 3.4 Other Europe 1.2 27.0 2.2 0.0 - USA 0.4 25.6 0.7 9% 0.2 - 25.2 Germany 2.1 Other NA 3.1 1.7 1.2 8% 0.8 0.8 SS Africa 2.3% 0.9 0.2 - 1.0 3% 0.4 0.2 NA/ME/CA -4.2% 4% 0.3 2.7 1.4 2.3 1.7 E Asia 10.4% 21.5 0.4 N America Australia 0.3 1.1 Spain 2.8 1.3 3.1 C/S America 0.5% 1.8 1.8 3.0 11% 5% New Zealand 2.4 0.0 - 12% 0.2 Australasia 0.6% 2.4 1.5 Australasia 4.5% 1.3 5% Chile 0.2 1.3 0.7 2.8 N America 2.9% 5% Europe Total = C/S America 3.1 14.9 25.2m litres Argentina 12% 59% 1.2 5% 24.9 22.3 Italy E Asia 1.7 6% Brazil 0.3 1% 19.7 4.0 18.7 16% China Other C/S America 16.2 1.5 0.4 14.9 Europe -0.2% 6% 2%

South Africa 1.0 France 4% Japan 0.1 0% 4.1 16% NA/ME/CA 0.2 1% Other Africa 0.01 1961 1971 1981 1991 2001 2012 0%

Source: OIV 2012 preliminary; UN FAO AgStat database 2011 where not available in OIV; Coriolis analysis 15 TOP 30 WINE PRODUCING COUNTRIES iFAB 2013 Over the past decade, global wine production shrinking across all major Western European producers and growing elsewhere; New Zealand is the 18th largest producer and led the top 30 in growth over the decade

TOP 30 WINE PRODUCERS 10 YEAR WINE PRODUCTION GROWTH RATE CAGR Litres; million; 2011 %; tonnes; 2002-2012 or 2001-2011 France 4.1 France -1.9% Italy 4.0 Italy -0.6% Spain 3.0 Spain -1.0% USA 2.1 USA 0.1% China 1.5 China 2.9% Australia 1.3 Australia 0.4% Chile 1.3 Chile 8.4% Argentina 1.2 Argentina -0.7% South Africa 1.0 South Africa 3.4% Germany 0.9 Germany -0.9% Russia 0.7 Russia 7.1% Portugal 0.3 Portugal -7.3% Romania 0.3 Romania -4.9% Greece 0.3 Greece 0.2% Brazil 0.3 Brazil -1.0% Austria 0.3 Austria 1.1% Serbia 0.2 Serbia 3.0% New Zealand 0.2 New Zealand 13.5% Ukraine 0.2 Ukraine -0.6% Hungary 0.2 Hungary -11.4% Moldova 0.1 Moldova -2.5% Bulgaria 0.1 Bulgaria 0.0% Georgia 0.1 Georgia 6.4% Switzerland 0.1 Switzerland -1.4% Japan 0.1 Japan -3.3%

Source: OIV 2012 preliminary; UN FAO AgStat database 2011 where not available in OIV; Coriolis analysis 16 SUMMARY - OTHER GLOBAL BEVERAGES iFAB 2013 New Zealand has a relatively minor position in the global beverage trade outside wine; cider is the key standout

GLOBAL BEVERAGE METRICS BY PRODUCT TYPE/CATEGORY 2011 or as available

New Zealand Global Global cross- % of production share of world production border trade that crosses exports Product L; b; 2012 L; b; 2011 borders % of l; 2011 Top 5 global exporting countries Alcoholic Wine 25b 11b 45% 2.4% France, Italy, Spain, Australia, Chile

Beer 185b 13b 7% 0.2% Mexico, Netherlands, Germany, Belgium, UK

Cider 3b 0.7b 23% 1.6% Sweden, Ireland, Germany, UK, Netherlands

Spirits 25b 13b 52% 0.2% UK, France, USA, Germany, Mexico

Non- Juice 60b 13b 22% 0.2% Brazil, USA, Belgium, Netherlands, Germany alcoholic Soft drinks 595b 16b 3% 0.4% Austria, Germany, Netherlands, Switzerland, USA Energy 5b drinks Bottled 232b 30b 13% 0.06% France, Italy, Belgium, USA, Germany water

Source: OIV; UN FAO AgStat database; Beverage Marketing Corp; Rabobank; NACM; UNCTAD; UN Comtrade database; Coriolis analysis & estimates 17 iFAB 2013 WINE – KEY PRODUCTION METRICS iFAB 2013 New Zealand is increasing wine production long term primarily through increasing the amount of land growing grapes

TOTAL HECTARES IN GRAPES TONNES CRUSHED Hectare; 1961-2013 Tonnes; 000; 1961-2013

40,000 350

35,000 300 30,000 52y 52y 250 CAGR 25,000 CAGR 8.7% 200 8.3% 20,000 150 15,000 100 10,000

5,000 50

- - 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

AVERAGE YIELD TONNES PER HECTARE NUMBER OF GRAPE GROWERS Tonnes/hectare; 1961-2013 #; actual; 2000-2013 25 2,000 1,800

20 1,600 Geographic units (SNZ) 1,400 Enterprises (SNZ) 15 1,200 1,000 10 1 800 Growers (NZW) 53y 600 5 CAGR -0.3% 400 200 - 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 - 2000 2001 2002 200320042005 2006 2007 20082009 2010 2011 2012 2013

1. Appears to be NZW member growers not total; Source: various NZWine annual reports; UN FAO AgStat database; MAF/MPI; Coriolis analysis 19 WINE – KEY PRODUCTION METRICS iFAB 2013 Area growth is occurring predominantly in Marlborough and in Sauvignon Blanc and Pinot Noir

TOTAL HECTARES IN GRAPES BY REGION SHARE OF HECTARES IN GRAPES BY VARIETY Hectare; 000; 1992-2013 % of hectare; 1992-2013 21y Change 100% Unknown Other red 35 Other NI +1 Merlot Other NI Gisborne - 90% Gisborne Pinot Noir 30 Hawkes Bay Hawkes Bay +4 80% Marlborough Cabernet Sauvignon Other white Nelson Pinot Gris 70% 25 Canterbury Riesling

Otago 60%

20

50%

Marlborough +21 15 40% Sauvignon Blanc

30% 10

20%

5 Nelson +1 10% Canterbury +1 Chardonnay Otago +2 - 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0% Muller Thurgau 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: various NZWine annual reports; Coriolis analysis 20 WINE – AREA VS. COMPETITORS iFAB 2013 New Zealand does not yet have a lot of area in wine relative to competitors, either at a country or a regional level

WINE GRAPE AREA: NZ VS. SELECT COUNTRY & REGION Hectare; 2012 or as available COUNTRY (ha; 000) REGION (ha; actual)

Spain 1018 Bordeaux 120,000 France 800 Côtes du Rhône 83,800 Champagne 35,200 Italy 769 Burgundy 29,500 Portugal 239 Sancerre 2,600 Romania 205 Pouilly-Fume 1,200 Greece 110 Hungary 64 Sonoma County 24,280 Napa Valley 17,400 Turkey 517 Oregon 8,094 Iran 239 South Australia 69,970 NSW 38,363 China 570 Victoria 24,713 Western Australia 10,316 USA 407 Tasmania 1,229 Argentina 221 Marlborough 23,232 Chile 205 Hawkes Bay 5,093 Australia 169 Gisborne 1,608 South Africa 131 Otago 1,909 New Zealand 36 Canterbury 1,454

Source: UN FAO AgStat; Statistics NZ; Department of Statistics; DairyNZ; Coriolis analysis 21 WINE – PRICES iFAB 2013 The price of New Zealand grapes to the grower and wine at the border were growing until the global financial crisis; since the there has been a strong correction that appears to have recently bottomed out

AVERAGE ANNUAL GRAPE PRICE PER TONNE AVERAGE DECLARED FOB WINE1 EXPORT VALUE PER LITRE NZ$; actual; 1991-2012 NZ$; 1988-2012

$2,000 $10.00

$8.00 $1,500

$6.00

$1,000

$4.00

$500 $2.00

$- $- 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

1. Uses HS 220410; Source: Statistics New Zealand database; various NZWine annual reports; Coriolis analysis 22 OTHER BEVERAGES iFAB 2013 New Zealand also exports a range of other beverages

Beer Cider Spirits Juice Flavoured beverages Water

Soft drinks Energy drinks

Key Hops Apples Whey alcohol Apples Sugar/sweetener Sugar/sweetener Water Ingredients Malted barley Pears Grain Kiwifruit Flavours Flavours Other Other fruit Juices

Source of NZ History of hops Major apple Whey byproduct of Major apple & Major producer of Early entrant in new Country image comparative production producer dairy industry kiwifruit producer obscure fruits category Marketing advantage (e.g. feijoa) Experience in beer IP controlled Launched in production varieties Australasia before arrival of Red Bull

Example

1. Technically a soft drink is a flavoured beverage, typically sweetened and carbonated; Source: various; photo credit (fair use; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 23 iFAB 2013 NUMBER OF FIRMS iFAB 2013 The number of beverages manufacturing firms has grown over the past decade; however in 2012 wine and beer increased number of enterprises while spirits and soft drinks consolidated

NUMBER OF BEVERAGES MANUFACTURING ENTERPRISES1 CHANGE IN NUMBER OF BEVERAGE MNFG. ENTERPRISES Enterprises; 2002-2012 Enterprises; absolute change; periods as given

552 557 10 YEAR CHANGE 1 YEAR CHANGE 528

475 Wine 193 7 441 444 410

376 359 Wine & 368 375 335 Cider 365 Spirit 13 -2 310 324 287 294 264 230 214 204 182 Beer 19 3

30 28 Spirits 28 20 21 24 28 28 27 15 16 61 64 Beer 53 47 49 46 47 39 39 45 47 Soft drink 22 -3

85 93 90 Soft drinks 68 68 78 76 76 79 83 82

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Note: 2012 data latest available as of Oct 2013; defined as C121-100 Soft Drink & Cordial, C121-200 Beer, C121-300 Spirit, C121-400 Wine and other alcoholic beverages; Source: Statistics NZ business demographics database; Coriolis analysis 25 iFAB TOP TEN BEVERAGES FIRM TURNOVER FY12 iFAB 2013 Lion BSW continues as the largest beverages firm in New Zealand by turnover in FY12

ANNUAL TURNOVER BY TOP 10 BEVERAGES FIRMS NZ$m; FY2012

Lion - Beer, Spirits & Wine NZ 1 $613

CCA 2 $494

DB Breweries 3 $466

Independent 4 $414^

Frucor 5 $406

Pernod Ricard 6 $236

Delegat's 7 $220

Constellation 8 $1961

Villa Maria 9 $120*

Treasury $113

^ Uses FY10 Independents most recent available financials; 1. Uses FY13 Feb year end; *Estimate; Source: various company annual reports; NZCO; Coriolis estimates and analysis 26 iFAB TOP TEN BEVERAGES TURNOVER GROWTH FY12 iFAB 2013 FY12 was a difficult year for the top 10 beverages firms with only Constellation and Treasury achieving sales growth

CHANGE IN ANNUAL TURNOVER BY TOP 10 BEVERAGES FIRMS ANNUAL TURNOVER % GROWTH BY TOP 10 BEVERAGES FIRMS NZ$m; FY2012 vs. FY2011 NZ$m; FY2012 vs. FY 2011

Constellation 1 $4 Constellation 1 2%

Treasury 2 $2 Treasury 2 2%

Frucor -$10* 3 Frucor -2% 3

Delegat's -$11 4 DB Breweries -3% 4

DB Breweries -$16 5 Lion - Beer, Spirits & Wine NZ -3% 5

Lion - Beer, Spirits & Wine NZ -$22 6 Delegat's -5% 6

Pernod Ricard -$22 7 CCA -6% 7

CCA -$31 8 Pernod Ricard-9% 8

Independent Independent No data No data Villa Maria Villa Maria

*Estimate; Source: various company annual reports; NZCO; Coriolis estimates and analysis 27 TOTAL BEVERAGES FIRM TURNOVER iFAB 2013 The New Zealand beverages industry is relatively consolidated, with the top ten firms accounting for about two thirds of turnover in FY12

TOTAL NEW ZEALAND BEVERAGES INDUSTRY ANNUAL TURNOVER BY TOP 10 BEVERAGES FIRMS & OTHER NZ$m; FY2012

Top 5 48%

Lion - Beer, Spirits & Top 10 Wine NZ 66% $613 12%

Other 500+ firms CCA $1,702 $494 34% 10%

TOTAL= $4,988m DB Breweries $466 9%

Independent^ $414 8% Frucor Treasury $113 2% $406 Pernod Villa Maria $120 3% Delegat's 8% $230 Ricard 5% $236 Constellation $196 4% 5%

^Independent uses FY2010; N/C = not calculable from data available; Source: various company annual reports; NZCO; Coriolis estimates and analysis 28 EMPLOYMENT BY SECTOR iFAB 2013 The beverages processing industry has grown employment over the past decade, though total employment is down in 2012 driven by soft drinks and spirits

TOTAL EMPLOYMENT BY BEVERAGES MNFG. ENTERPRISES CHANGE IN BEVERAGES MNFG. EMPLOYMENT Headcount; as of Feb; 2002-2012 Absolute change; periods as given

9,270 9,370 10 YEAR CHANGE 1 YEAR CHANGE 9,050 8,930 8,950 9,010 8,670 8,330 8,190 7,810 Wine 950 60 7,400

5,290 5,260 4,750 4,810 Wine & 4,920 4,830 Cider 4,730 4,310 4,380 4,240 Spirit 150 -80 3,860

510 430 Spirits 520 520 450 590 590 640 590 280 270 Beer 280 90 1,600 1,490 1,540 1,690 Beer 1,460 1,470 1,440 1,410 1,580 1,700 1,500

Soft drink 230 -110 1,980 2,070 2,060 2,190 2,080 Soft drinks 1,850 1,720 1,730 1,900 1,850 1,900

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Note: 2012 data latest available as of October 2013; 1. Defined as C113-100 Milk & Cream processing and c113-300 Other beverages processing; Source: Statistics NZ business demographics database; Coriolis analysis 29 EMPLOYMENT BY REGION iFAB 2013 Beverages manufacturing employment growing in Marlborough and Otago/Southland and declining in Canterbury and Auckland; limited change elsewhere

BEVERAGES MNFG. EMPLOYMENT BY REGION 5 YEAR CHANGE IN BEVERAGES MNFG. EMPLOYMENT BY REGION Headcount; as of Feb; 2007-2012 CAGR; Absolute change; 2007-2012

9,270 9,370 Classified elsewhere 366 9,050 8,930 8,950 9,010

Northland -20

2,542 2,637 2,367 2,439 2,828 2,733 Classified elsewhere1 Auckland -220

40 45 70 40 Waikato/BOP -105 40 50 Northland

Hawkes Bay/Gisb 15 3,000 2,980 2,990 3,050 2,620 2,760 Auckland Wel/Mana/Tara 15

280 Nelson/Tas/WC 20 300 275 360 245 255 Bay of Plenty/Waikato 760 660 690 660 710 675 Hawkes Bay/Gisborne 170 200 Marlborough 80 285 250 235 Wellington/Manawatu/Taranaki 220 275 175 250 295 275 270 Nelson/Tasman/West coast

1,190 1,170 Canterbury -130 1,050 1,090 1,120 1,130 Marlborough

660 600 620 540 570 470 Canterbury Otago/Southland 59 373 373 443 366 382 432 Otago/Southland 2007 2008 2009 2010 2011 2012 5y ABS +80 1. Data is geographic level; classified elsewhere would include non-”beverages manufacturing” activities (e.g. regional distribution & wholesaling); Source: Statistics NZ business demographics database; Coriolis analysis 30 EMPLOYMENT BY FIRM iFAB 2013 The top five employers account for about half of industry employment

BEVERAGES MNFG. EMPLOYMENT BY KEY FIRM Headcount; 2012, 2013

Lion - Beer, Spirits & Wine NZ, 1,000

CCA, 1,000 , 11%

Other, 4,050 , 45% Total = 9,010 Frucor, 900 , 10%

Pernod Ricard, 750 , 8%

DB Breweries, 500 , 5%

Delegat's, 50 , 1% Treasury, 70 , 1% Constellation, 270 , 3% Independent, 170 , 2% Villa Maria, 250 , 3%

Source: SNZ business demographics; Kompass; various firm websites; published articles; Coriolis interviews & analysis 31 iFAB TOP TEN NEW BEVERAGE INVESTMENT iFAB 2013 Recent investment has been in upgrading and expanding production

IDENTIFIED MAJOR INVESTMENTS IN NEW PLANT/EQUIPMENT Identified, as of October 2013

Rank Announced Investment Firm Facility Location Opened/planned

1 2012 $35m Coca-Cola Amatil Plant upgrade in Mt Wellington, Auckland 2012 Auckland (employing 400 in Auckland and 1,000 Nationally)

2 2012 $30m Lion Redevelopment of the Speight's Brewery Dunedin 2013

3 2011 $20.1m DB Breweries New brewhouse Waitemata 2011

4 Mar 2011 $15m Coca-Cola Amatil $15m investment in beverage bottle plant Christchurch Jan 2012 in Christchurch 5 May 2012 N/A Babich Building a new 6,000t winery at Cloudy Marlborough 2014 Bay Business Park, for Marlborough crop 6 2012 $4m Monteiths Upgraded brewery Greymouth, West Coast 2012

7 2012 $4m Simply Squeezed Expanding, sourcing additional oranges Napier 2012 and greater processing facilities (100 staff, 43 franchises, 22 grower suppliers) 8 Sept 2013 N/A Indevin Leasing and developing 124-hectare Awatere 2014 sauvignon blanc vineyard in the Awatere Valley 9 2012 N/A MO2 New plant planned with 9,500 bottles/hr Waikato 2013 with 6 flavours of carbonated milk drink 10 2011 N/A Delegat’s Group Upgrading facility in West Auckland, new Auckland 2012 bottling and pack line

Source: Coriolis from various published articles, annual reports & interviews 32 iFAB TOP TEN BEVERAGE ACQUISITIONS iFAB 2013 There have been a range of identified acquisitions in the beverages industry, ranging from very big to small

IDENTIFIED MAJOR ACQUISITIONS INVOLVING NEW ZEALAND BEVERAGES FIRMS As of October 2013

Rank Acquirer Target Price Date Details

1 Heineken ~50% of APB/DB Breweries S$7.9b Sep 2012 Heineken acquired remaining shareholding in Asia Pacific Breweries it didn’t own it did not own from Fraser & Neave (JV since 1931); 30 breweries across Asia including DB 2 Asahi Independent Liquor $1.5b Aug 2011 From Erceg family and PEP

3 Asahi Charlies Beverages $129.3m July 2011 New Zealand-based fruit juice producer, includes Charlies, Phoenix and Juicy Lucy brands 4 Delegat’s Group Barossa Valley Estate A$24.7m Apr 2013 Acquisition of the assets of Barossa Valley Estate Limited, including a 41 hectare vineyard and 5,000 tonne winery in the Barossa Valley, South Australia 5 Independent Liquor The Mill $20.6m May 2013 Nationwide chain of 35 liquor outlets (Asahi) 6 Foley Family Wines Te Kairanga Wines $11m 2011 127 ha freehold land in Wairarapa, including 6.6 ha of McLeod Vineyard (USA) 7 Delegat’s Group Hawke's Bay assets of $8.5m Jan 2013 Winery and vineyard assets of Hawkes Bay's Matariki Wines and an associated Matariki Group company Stony Bay Wines; 61ha of land 8 Treasury Wine Remaining 50% of Rapaura N/A Nov 2012 Acquired 50% share of JV partner Babich (plans to extend winery from 15,000tpa Estate/Matua Vintners (sales of $14.4m to 25,000; an integrated wine business providing packaging, bottling, laboratory FY12) and warehousing servicese; expansion value of $11m; change name to Matua Marlborough 9 DB Breweries 92% of Redwood Cellars $8.2m (AR Jun 2012 DB Breweries bought a majority shareholding in Nelson cider and fruit wine maker 12 p14) Redwood Cellars 10 Foley Family Wines NZ Wine Company N/A Aug 2012 Acquisition adds Grove Mill, Sanctuary and Frog Haven brands to its suite of local (USA) wines; name changes to Foley Family Wines

Source: Coriolis from various published articles, annual reports & interviews 33 MORE BEVERAGE ACQUISITIONS iFAB 2013 …continued

IDENTIFIED MAJOR ACQUISITIONS INVOLVING NEW ZEALAND BEVERAGES FIRMS As of October 2013

Acquirer Target Price Date Details

Lion NZ (Kirin) Emersons Brewery $8m Nov 2012 Addition of New Zealand Craft brewery to portfolio

Delegat’s Group 2 Marlborough properties N/A Late 2012 121 ha in Wairau Valley and 91 ha in the Awatere Valley

Mission Estate Cape Campbell N/A May 2012 100 ha in Marlborough, Cable Station Rd Winery Independent Liquor Founders Brewery N/A Feb 2013 Small Nelson craft brewer (Asahi) Folium Vineyard Ltd Fromm and Partner $2.24 Mar 2011 8.4 hectares land in Marlborough

Achim Bauer and Kina Beach Vineyard $2m Feb 2012 6ha vineyard in Tasman Karin Schoch Yealands Ager Sectus Wine Estates N/A Aug 2011 Two wineries Hawkes Bay and Awatere Valley (ASWE) VinLink Marlborough new winery N/A 2012 New 16,500 T facility at Riverlands estate

Babich Tetley Brook Vineyard N/A Dec 2012 49ha Tetley Brook Vineyard in Marlborough

Source: Coriolis from various published articles, annual reports & interviews 34 CLOSURES/DIVESTMENTS iFAB 2013 There have been number of closures in the beverage sector

IDENTIFIED MAJOR CLOSURES INVOLVING NEW ZEALAND BEVERAGES FIRMS As of October 2013

Company Date Details

Ascension May 2013 Vineyard (7.56ha) ,winery event venue in receivership (Matakana) ; for sale for $2.3m; 50 job losses

Pernod Ricard Winemakers NZ June 2012 Closes Hawkes Bay Winery as its under-utilised since selling many brands to Lion - consolidating its manufacturing operations in its Church Road Winery at Taradale. Plans to reinvest in Church Road; 13 job losses Pernod Ricard Winenmakers NZ Jan 2011 Sells Lindauer brand and others from Gisborne and Hawkes Bay totalling $89m

St Helena April 2011 Mortgagee sale of 41.6 hectare winery in Canterbury (established in 1978 by Mundy family)

Source: Coriolis from various published articles, annual reports & interviews 35 FOREIGN INVESTORS iFAB 2013 The New Zealand beverages industry has attracted significant foreign investment

FOREIGN INVESTMENT IN MAJOR NEW ZEALAND BEVERAGES FIRMS As of October 2013

Date Investor Origin Investment Investor description

2011 Baywa Germany Turners & Growers (ENZA) Agriculture, building materials & energy

2011 Asahi Japan Independent Liquor Major Japanese brewer

2011 Asahi Japan Charlie’s Group Major Japanese brewer

2009 Foley Family Wines USA Vavasour US wine company

2012 Foley Family Wines USA NZ Wine Company (Grove Mill, Sanctuary US wine company and Frog Haven brands 2009 Kirin Japan Lion – Beer, Wine & Spirits NZ Major Japanese brewer

2008 Suntory Japan Frucor Beverages Major Japanese brewer

2006 Bacardi Bermuda 42 Below Vodka Largest private, family-owned spirits company in the world (US$5b; 6,000 employees); Bacardi, Grey Goose, Dewar’s, Bombay Sapphire 2001 Treasury Wine Estate Australia Matua Foster’s wine division; spun off in 2011; Penfolds, Wolf Blass, Jamieson’s Rum, others 1998 BRL Hardy; later USA Nobilo Holdings Global wine producer Constellation Brands 1993+ Heineken Netherlands DB Breweries Third largest global beer manufacturer (200m hl)

1991+ Pernod Ricard France Pernod Ricard NZ (former Montana) Global spirits manufacturer and marketer

1990 LVMH France Cloudy Bay Louis Vuitton Moët Hennessy (LVMH) is a multinational luxury goods conglomerate with champagne, cognac, other spirits brands 1939+ Coca-Cola Amatil Australia Coca-Cola Holdings NZ Regional Coca-Cola bottler

Source: Coriolis from various published articles and annual reports 36 iFAB 2013 TOP 10 BEVERAGES FIRM PROFILES iFAB 2013 1 2 3 4 LION – B,S & W NZ COCA-COLA HOLDINGS NZ DB BREWERIES LTD INDEPENDENT LIQUOR

Rory Glass Barry O’Connell Andy Routley Julian Davidson Managing Director Managing Director Managing Director Chief Executive

DESCRIPTION: Brewer of beer, maker of wine; DESCRIPTION: Manufacturer and distributor of juice DESCRIPTION: Producer of beer and cider; DESCRIPTION: Distiller of spirits, brewer of beer, Steinlager, Lion Red, Speights, Canterbury Draught, and soft drinks; many brands under license from Monteith’s, Tui, DB, Export Gold, Old Mout, Woodstock, Cruiser, Cody’s, Canterbury Cream, Stella Artois (license), Mac’s, Isaac’s, Emersons, Coca-Cola USA Heineken (license), Tiger (license) Boundary Road, others Wither Hills, Corbans, Te Hana, Lindauer, Daniel le Brun, Huntaway, and marketer and distributor of many spirits

KEY PRODUCTS: Beer, wine, spirits, RTDs, cider KEY PRODUCTS: Soft drinks, juices, water KEY PRODUCTS: Beer, Cider, RTDs KEY PRODUCTS: RTDs, spirits, beer

OWNERSHIP: Japan; listed on TYO (2503) OWNERSHIP: Australia; listed on ASX OWNERSHIP: Netherlands; listed on Euronext OWNERSHIP: Japan; listed on TYO (2502); Asahi Heineken International (via Asia Pacific Breweries, Group Holdings Singapore); Third largest brewer in the world

COMPANY NUMBER: 33986 COMPANY NUMBER: 440039 COMPANY NUMBER: 71013 COMPANY NUMBER: 354989

ADDRESS: 27 Napier Street, Freemans Bay, ADDRESS: The Oasis, Mt Wellington ADDRESS: 1 Bairds Road, Otahuhu, Auckland ADDRESS: 35 Hunua Road, Papakura, Auckland Auckland 1011 Private Bag 14916, Panmure Auckland

PHONE: +64 9 357 0111 PHONE: +64 9 570 3000 PHONE: +64 9 259 3000 PHONE: +64 9 298 3000

WEBSITE: www.lionco.com www.lion-nathan.com.au WEBSITE: ccamatil.co.nz WEBSITE: www.db.co.nz WEBSITE: www.independentliquor.co.nz/ www.kirin.com www.kirinholdings.co.jp ccamatil.com www.theheinekencompany.com www.asahigroup-holdings.com

YEAR FORMED: 1860/1968/1977 YEAR FORMED: 1939/1948 YEAR FORMED: 1930 YEAR FORMED: 1987

STAFF EMPLOYED: 1,000 STAFF EMPLOYED: 1,100 STAFF EMPLOYED: 500 STAFF EMPLOYED: 170

REVENUE: $613.2m (FY12; YE Sep) REVENUE: $493.8m (FY12; YE Dec) REVENUE: $465.7m (FY12; YE Sep) REVENUE: $414.4 (FY10)

COMPANY HIGHLIGHTS: Acquired Emerson’s COMPANY HIGHLIGHTS: New MD; $15m COMPANY HIGHLIGHTS: New MD replacing Brian COMPANY HIGHLIGHTS: Acquired The Mill (May brewery (New Zealand craft beer company) investment in beverage bottle plant in Christchurch; Blake (in March 2013); parent Asia Pacific now fully 2013, 35 stores); acquired Founders Brewery (Feb parent acquired Fijian brewer controlled by Heineken 2013); write down of assets in NZ of $533m; court action against former PE owners

Source: annual reports, company websites, company data, NZ Companies Office, interviews, Coriolis estimates 38 TOP 10 BEVERAGES FIRM PROFILES iFAB 2013 5 6 7 8 FRUCOR BEVERAGES PERNOD RICARD WINEMAKERS DELEGAT’S GROUP NOBILO HOLDINGS CONSTELLATION BRANDS NZ

Carl Bergstrom Fabian Partigliani Jim Delegat Joe Stanton Group Managing Director Managing Director Managing Director Chief Executive Officer

DESCRIPTION: Manufacturer of soft drinks, juices DESCRIPTION: Wine maker and grower; Montana, DESCRIPTION: Manufacturer of wine; Oyster Bay DESCRIPTION: Grower and manufacturer of wines; and other beverages; V, Just Juice, Citrus Tree, Church Road, Deutz, Brancott Estate, Stoneleigh, Nobilo, Kim Crawford, Drylands, Monkey Bay, Selaks Mizone, others Longridge ,

KEY PRODUCTS: Soft drinks, juice, water KEY PRODUCTS: Wine, sparkling wine KEY PRODUCTS: Wine KEY PRODUCTS: Wine

OWNERSHIP: Japan; private; Suntory Holdings (90% OWNERSHIP: France; listed on Euronext OWNERSHIP: New Zealand; listed on NZX:DGL OWNERSHIP: United States; listed on NYSE (STZ) Kotobuki Realty; Torii family; others) (Delegat family ~66%)

COMPANY NUMBER: 913026 COMPANY NUMBER: 86020 COMPANY NUMBER: 523716 COMPANY NUMBER: 1477933

ADDRESS: 86 Plunket Avenue, Wiri, Auckland 2104 ADDRESS: Level 5, 4 Viaduct Harbour Avenue ADDRESS: Level 1, 10 Viaduct Harbour Avenue, ADDRESS: 45 Station Road, Huapai Auckland Central, Auckland 1010 Auckland PO Box 471, Kumeu Auckland

PHONE: +64 9 250 0100 PHONE: +64 9 336 8300 PHONE: +64 9 359 7300 PHONE: +64 9 412 6666

WEBSITE: www.frucor.co.nz www.suntory.com WEBSITE: www.pernod-ricard-nz.com WEBSITE: www.delegats.co.nz WEBSITE: www.constellationnz.com www.cbrands.com

YEAR FORMED: 1987 YEAR FORMED: 1961 (Montana) YEAR FORMED: 1947/1991 YEAR FORMED: 2004

STAFF EMPLOYED: 900 STAFF EMPLOYED: 750 STAFF EMPLOYED: 50 STAFF EMPLOYED: 270 (Dry 100)

REVENUE: $405.8m (FY12; YE Dec) REVENUE: $235.9m (FY12; YE Jun) REVENUE: $222m (FY12); $230m (FY13; YE June) REVENUE: $192m (FY12); $195.8m (FY13; YE Feb)

COMPANY HIGHLIGHTS: Parent Suntory went COMPANY HIGHLIGHTS: Changed name to Pernod COMPANY HIGHLIGHTS: Acquired Barossa Valley COMPANY HIGHLIGHTS: Parent firm sold all public in Japan as family owners sold down share (Jul Ricard Winemakers NZ; rebranded Montana as Estate in Australia; acquired 496ha in Marlborough Australian operations in Dec 2010 2013) Brancott and several vineyards in Hawkes Bay; case sales up +25% to North America; North America will be key growth region for the group for the next 6 years; Operating EBIT $44.6m

* estimate; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Coriolis estimates 39 TOP 10 BEVERAGES FIRM PROFILES iFAB 2013 9 10 VILLA MARIA ESTATE TREASURY WINE ESTATES

Sir George Fistonich Sam Glaetzer Founder & Owner Director NZ

DESCRIPTION: Wine maker and grower; Villa DESCRIPTION: Wine maker and grower; Matua Maria, Vidal Estate, Riverstone, Thornbury, Esk Valley, Te Awa

KEY PRODUCTS: Wine KEY PRODUCTS: Wine

OWNERSHIP: New Zealand; private (Fistonich OWNERSHIP: Australia; listed on ASX family)

COMPANY NUMBER: 291073 COMPANY NUMBER: 271464

ADDRESS: 118 Montgomerie Road, Mangere, ADDRESS: Waikoukou Valley Road, Waimauku, P O Box 43046, Mangere, Auckland Kumeu

PHONE: +64 9 255 0660 PHONE: +64 9 354 5250

WEBSITE: www.villamaria.co.nz WEBSITE: www.treasurywineestates.com www.matua.co.nz/

YEAR FORMED: 1961 YEAR FORMED: 1974/1985

STAFF EMPLOYED: 250 STAFF EMPLOYED: 70 (?)

REVENUE: $120m* (FY13 estimate) REVENUE: $112.7m (FY12; YE Jun)

COMPANY HIGHLIGHTS: Founder inducted into COMPANY HIGHLIGHTS: Acquired remaining 50% NZ Business Hall of Fame; founder awarded 2013 share in JV Raparua Vintners (sales $14.4m); Rabobank Leadership Award released first carbon zero wine

*Estimate; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Coriolis estimates 40 OTHER BEVERAGES FIRM PROFILES iFAB 2013

Ownership Company MD/CEO Business description Company # Formed Revenue Staff Address Website

ENZA Foods John Marks Fruit juice and ingredient 41406 1962/ $57.3m 150 1305 Tomoana Road, www.enzafoods.co.nz General Manager manufacturer (retail, T&G (Foreign, 1990 Hastings, Hawkes Bay Freshfields and ENZA brands foodservice, ingredients, toll Germany 64 6 878 9296 processing) in Hastings and owned Baywa) Nelson

Yealands Wine Estate Jason Judkins Winery in Awatere and Hawkes 1763574 2006 $50- 130 534 Seaview Road www.yealands.co.nz CEO Bay #6 wine company; NZ; Private 100m+ Seddon , Canterbury Yealands, Violet, Crossroads, (75% Yealands, 64 3 575 7618 Talisman brands 25% ASWE, Cutfield others)

Craggy Range Michael Wilding Wine makers across five 912925 1998 $31.8m 120 253 Waimarama Road www.craggyrange.com Vineyards COO vineyards Foreign AU Havelock North, (Tandom) 64 6 873 7126

Simply Squeezed Ltd Adrian Barr Manufacturer of fresh juices 2352451 1993/ $25- 100 Level 1, 15 Hardinge Road www.simplysqueezed.com Chief Executive 7,000 tpa fruit processed Private: Japan 2009 35m* Ahuriri Frucor (Suntory)

The Better Drink Co Ltd Craig Cotton Juice and beverage company 969423 1982 $32m* 80 Suite 101, The Axis www.charliesgroup.co.nz/ Chief Executive Foreign, Japan; Building, 1 Cleveland “The Better Drinks Co.” listed Asahi Road, Parnell, Auckland Charlies, Phoenix, Juicy Lucy, 64 9 837 6740 Stash Tea

Harrington’s Breweries John Harrington Beer and RTD manufacturing 133038 1991 $25- 70 199 Ferry Road www.harringtonsbreweries.co.n Director and retail NZ; private 30m* Philipstown, Christchurch z (Harrington 64 3 355 5632 family)

Foley Family Wines NZ Mark Turnbull USA wine company; Vavasour, 307139 1986 $30.9m 60* 13 Waihopai Valley Road, www.grovemill.co.nz CEO Grove Mill, Te Kairanga, Foreign; USA Renwick, Marlborough Acquired NZ Wine Company Goldwater, Sanctuary, The (Foley 80%; 64 3 572 8200 2012; 2013 season 5,698 t Pass, Boatshed Bay, Dashwood 20% NZ) grapes processed brands

Indevin Ltd Duncan McFarlane Contract wine making services 3164447 2004 / $15- 64 Cloudy Bay Business, Park www.indevin.com Managing Director Wineries in Hawkes Bay & NZ; Private 2010 30m* State Highway 1, 17-19 (JV with Lion 2010,make many Marlb; Te Hua, Crux, Leading (82% Wallace, Winefair Close, Blenheim of their brands) Light, Ngakuta Bay, The Post, 18% others) 64 3 520 6810 Process 15% of all grapes in NZ The Prospect brands

Just Water Tony Falkenstein Water coolers and water 1440340 1987 $27.8m 60 114 Rockfield Road, www.justwater.co.nz CEO distribution to offices and NZ; listed Penrose, Auckland homes; NZ & Au (NZX:JWI) 64 9 630 1300

* Estimate based on number of employees and type of business activity; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Kompass, Coriolis estimates 41 OTHER BEVERAGES FIRM PROFILES iFAB 2013

Ownership Company MD/CEO Business description Company # Formed Revenue Staff Address Website

Mud House Wine MJ Loza Winery 1144096 2001 $38.0m 60 22 Liverpool St www.mudhouse.co.nz Group CEO Waipara Hills, Dusky Sounds, NZ; Public Riverlands Estate Le Grys and Mud House unlisted (19% Blenheim, Marlborough brands; Incl. NZ Extracts Ltd Marlb Wine 64 3 520 6011 Tourism, others)

Amisfield Wine Craig Erasmus Winery based in Queenstown 401358 1999 $25- 60 10 Lake Hayes Road, RD 1, www.amisfield.co.nz Company CEO Amisfield, Arcadia, Lake Hayes NZ; Private 30m* Queenstown, brands (Richardson, 64 3 442 0556 Darby)

Cloudy Bay VIneyards Ian Morden Winery based in Marlborough 271895 1985 $46.1m 50 Jacksons Road, Blenheim, www.cloudybay.co.nz Estate Director Cloud Bay, Pelorus, Dolphin Foreign; France Marlborough Purchased Cloudy Bay 1990 brands listed 64 3 520 9140 Marlborough-based vineyards

Soljans Estate Winery Tony Soljan Winery based in Auckland, plus 658205 1937 $10m* 50 366 State Highway 16, www.soljans.co.nz Managing Director café and functions NZ; Private Kumeu, Auckland (Tony Soljan) 64 9 412 5858

Morton Estate Wines John Coney Winery operations in Hawkes 668538 1982 / $30- 50 Morton House, 2 www.mortonestatewines.co.nz CEO Bay and Marlborough;

Mills Reef Winery Nick Aleksich Wine makers; Mills reef, reef 26464 1965 $12-15m 50 143 Moffat Road, www.millsreef.co.nz General Manager reserve, Prestons brands NZ; Private Bethlehem, Tauranga (Preston 64 7 576 8800 Family, others)

BevPac New Zealand Graham Lundie Carbonated beverage 803057 1996 $15- 50 76 Lady Ruby Drive www.petbottles.co.nz Managing Director manufacturers and contract NZ; Private 20m East Tamaki, Auckland TSL plastics packers; Jolly brand, house (Lundie, Simth, 64 9 914 7180 brands Mazur, Borich)

Juice Products NZ Ltd Peter Stewart Fruit and vegetable juices, 1207153 2002 $7-12m 45 55 Sheffield Street www.jp-nz.com General Manager concentrates, purees, blends NZ; Private Timaru Marketed by RD2 International (Honiss, 64 3 687 4170 Walker, Iversen others)

* Estimate based on number of employees and type of business activity; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Kompass, Coriolis estimates 42 OTHER BEVERAGES FIRM PROFILES iFAB 2013

Ownership Company MD/CEO Business description Company # Formed Revenue Staff Address Website

Mission Estate Winery Peter Holley Winery 960152 1851 $10- 40 198 Church Road, www.missionestate.co.nz CEO NZ; Private 12m* Taradale, Napier (Marist 64 6 845 9350 Holdings)

Tasman Bay Food Brian Hirst Food and beverage (Fruit wine, 268656 1985 $15- 40 61 Factory Road www.futurefoods.co.nz Managing Director ciders, juices) manufacturers NZ; Private 20m* Brightwater, Tasman www.tasmanbay.co.nz and wholesalers (Hirst, others) 64 3 543 5340

Gibbston Valley Ashling Swirtz Winery, restaurant, wine tours 449621 1987 / $5- 40 1820 State Highway 6, RD www.gibbstonvalleynz.com General Manager based in Queenstown USA; Private 1990 10m* 1, Gibbston, Queenstown (Griffith, Pike)

Sacred Hill Vineyards David Mason Three wineries; Sacred Hill, 961615 1986/ $35- 35 James Rochfort Place, RD www.sacredhill.com Managing Director Wild South, Gunn Estate Mixed: Private 1999 40m* 5, Hastings 36% export brands NZ; 64 6 879 8760 (65% Mason family) HK (30% Jebson Beverage )

Seifried Estate Hermann Seifried Winery ; Aotea, Old Coach 918475 1970 $12- 35 Redwood Road www.seifried.co.nz Director Road, Rabbit Island, Redwood NZ; Private 15m* Appleby, Nelson Valley, Seifried, Tapu Bay, (Seifriedn 64 3 544 5599 Venture cove, Winemakers Family) Collection brands

Palliser Estate Richard Riddiford Winery 387777 1988 $4.3m 30 Kitchener Street, www.palliser.co.nz Managing Director NZ; Private (FY13) Martinborough (Riddiford, 64 6 306 9019 Morrison, others)

Giesen Wine Estate Marcel Giesen Wine makers Canterbury; 257877 / 1983 $40- 30 272 Main South Road www.giesen.co.nz Director Giesen, Voyage brands 1004906 50m* Hornby, Christchurch NZ; Private 64 3 344 6270 (Giesen Family)

Pegasus Bay Winery Ivan Donaldson Winery and restaurant in 977771 1985 / $12- 30 Stockgrove Road, RD 2 www.pegasusbay.com Owner Canterbury NZ; Private 1999 15m* Amberley, North (Donaldson Canterbury family) 64 3 314 6869

Babich Wines Ltd Joe Babich Winery; Babich, Iron Gate, The 57990 1916 / $30- 30 Babich Road, Henderson www.babichwines.co.nz Managing Director Patriarch, Fume Vert brands NZ; Private 1959 40m* Valley, Auckland Export 57% (Babich Family) 64 9 833 7859

* Estimate based on number of employees and type of business activity; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Kompass, Coriolis estimates 43 OTHER BEVERAGES FIRM PROFILES iFAB 2013

Ownership Company MD/CEO Business description Company # Formed Revenue Staff Address Website

Coopers Creek Andrew Hendry Vineyard and cafe 93470 1975 $12- 26 601 State Highway 16, www.cooperscreek.co.nz Vineyard Managing Director NZ; Private 15m* Huapai, Auckland (Hendry, Smith 64 9 412 8560 others)

Saint Clair Family Neal Ibbotson Winery; St Clair, Doctors Creek, 1017340 2000 $40- 25 30-32 Liverpool Street, www.saintclair.co.nz Estate Director Tuatara Bay brands NZ; Private 45m* Riverlands Estate, (Ibbotson Blenheim family, others) 64 3 578 8695

Allan Scott Wines & Allan Scott Winery; Allan Scott, Moa ridge, 608289 1993 $15- 25 Jacksons Road, RD 3 www.allanscott.com Estates Director Scott base brands NZ; Private 20m* Blenheim (Scott) 64 3 572 9054

VnC Cocktails Ltd Shane McKillen Manufacture and export of 1974727 2007 $5- 25 Level 2 Imperial Building, www.vnccocktails.com Director ready-to-serve mixed cocktails; NZ; Private 10m* 44 Queen Street, 90% exported (36% McKillen; Auckland 27% Cook, oth) 64 9 915 0015

Mount Riley Wines John Buchanan Wine makers in Blenheim 869998 1997 $15- 20 101 Wairau Road, www.mountriley.co.nz Managing Director NZ; Private 20m* Glenfield, Auckland (John 64 9 444 1955 Buchanan)

New Zealand Quality Ian Riley Producers and exporters of 1886777 1990 $5- 20 83 Domain Road www.nzqw.co.nz Waters Managing Director mineral water; export 50% Mixed; Private 10m* Putaruru (Riley 58%, 64 7 883 8499 NzO Interntl H.K 42%)

Moa Brewing Company Gareth Hughes Listed craft beer brewer based 1528394 2003 $2.45m 19 Level 1 Union Fish Co. www.moabeer.co.nz General Manager in Blenheim NZ; Public (PE Building, 116-118 Quay Pioneer 25%, Street, Auckland others) 64 9 367 9472

McCashins Brewery Andrew Murray Brewers of beer, cider, water, 2223762 2006 $10- 18 660 Main Road, Stoke, www.mccashins.co.nz General Manager spirits manufacturer; Stoke, NZ; Private 15m* Nelson Rochdale, 26000Vodka, Frute, (McCashin & 64 3 547 5357 Palaeo Water brands others)

Kono NZ Don Everitt Producers of wine brands under 3438072 1977 $16m 16 Level 2, Wakatū House wakatu.org.nz CEO the Tohu and Kono brands Private/Iwi (12) Montgomery Square, (Wakatu) (Gp Nelson $70m) 64 3 578 2069

Hunter's Wines (NZ) Jane Hunter Winery and restaurant; Hunters 140641 1979 $7-10m 15 603 Rapaura Road www.hunters.co.nz Ltd Managing Director and Spring Creek brands; NZ; Private Blenheim export 45% (Hunter) 64 3 572 8489 * Estimate based on number of employees and type of business activity; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Kompass, Coriolis estimates 44 OTHER BEVERAGES FIRM PROFILES iFAB 2013

Ownership Company MD/CEO Business description Company # Formed Revenue Staff Address Website

Redwood Cider Co Justin Hall Cider manufacturer Old Mout 1774339 1985 / $5- 15 523 Moutere Highway, www.redwoodcider.co.nz Managing Director Cider, Monteith’s cider brands, DB 92% 2006 10m* RD 1, Richmond, Nelson Rekorderlig (License) 64 3 544 2706

Bacardi NZ Clare Bradley Vodka spirits manufacturer 42 1057818 2000 $10.8 N/A Lion Nathan sales www.42below.com; NZ Marketing (Lion) below; acquired by Bacardi Foreign: (“10) www.bacardi.com Netherlands; Formerly listed in NZ; acquired Private (Bacardi Sales and marketing by Lion family)

Other Wineries: Kumeu River, Mt Difficulty, Lawsons Dry Hills, Whitehaven, Trinity Hill, Dog Point, Forrest Estate, Akarua, Peregrine, Mahurangi River, Waimea Estate, Nautilus, Framingham Wines, Carrick, Murdoch James, Ransom, Anchorage Wines, CJ Pask Winery, Clearview Estate, Waipara Springs Winery and Restaurant, Moana Park Winery, Kahurangi Estate, Matahiwi Estate, Ata Rangi Vineyards, Bulmer Harvest, No. 1 Family estate, Karikari Estate, Konrad Wines, Spencer Hills estate, Blackridge Vineyard, Chard Farm, Highfield Estate, The Milton, Rippon Vienyard, Marsden Estate, West Brook Winery, Brookfields Vineyards, Churton, Destiny Bay, Wild Earth, Lincoln Wines, Richmond Plains, Martinborough Vineyard, Alana Estate, Mt Rosa, Ohinemuri, Kaimira, Fossil; Ridge, Julicher, Opihi, Pleasant Valley Wines Three Miners, Auntsfield Estate, Ohau Gravel, Urlar estate, Maven Wines, Fromm winery, Two Paddocks, Rockburn, Okahu Estate, Huia Vineyards, Borthwick, Rimu Grove, Schubert Wines… and many others

* Estimate based on number of employees and type of business activity; Source: annual reports, company websites, company data, NZ Companies Office, interviews, Kompass, Coriolis estimates 45 iFAB 2013 BEVERAGES – EXPORTS BY REGION iFAB 2013 Over the past decade New Zealand beverages exports have achieved strong growth driven primarily by developed Western countries

10 YEAR NEW ZEALAND BEVERAGES EXPORT VALUE BY SUPER-REGION US$m; 2002-2012 10 Year CAGR Absolute

$1,257 TOTAL 20% +$1,049m

$96 E Asia 21% +$81m $1,140 $35 SE Asia 21% +$30m $12 Other 18% +$10m $80 $32 10y $971 $12 CAGR 20% $51 $25 $10 $816 $496 Australia/ Pacific Is. 21% +$422m $789 $38 $440 $722 $17$9 $43 $18$7 $28 $370 $14$7

$337 $524 $311 $269 $20 $454 $9$5 $305 N. America 22% +$262m $23 $266 $378 $4$9 $187 $241 $21 $4$8 $155 $176 $188 $187 $258 $137 $16 $208 $6$2 $147 $15 $5$2 $93 $121 $92 $313 Europe 16% +$244m $74 $274 $310 $58 $229 $227 $222 $43 $156 $116 $141 $69 $83

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: UN Comtrade database; Coriolis analysis 47 EXPORT DOLLARS iFAB 2013 Australia, the USA, the UK and Canada (“the Anglo-Saxon four”) remain the largest markets by value for New Zealand’s beverages exports

TOP 25 BEVERAGES MARKETS BY EXPORT VALUE US$m; 2012 Australia $473 USA $239 United Kingdom $235 Canada $67 Japan $39 China $27 Netherlands $23 Hong Kong SAR $19 Singapore $18 Ireland $11 Sweden $11 Malaysia $10 South Korea $10 Germany $8 France $7 Cook Isds $6 United Arab Emirates $6 Belgium $5 Denmark $5 Fiji $4 Papua New Guinea $4 Philippines $3 Latvia $2 Thailand $2 Finland $2 Source: UN Comtrade database; Coriolis analysis 48 EXPORT DOLLAR GROWTH iFAB 2013 Australia, the US & Canada led export dollar value growth, but strong growth coming from a wide range of Asia- Pacific countries; UK growth is slowing

TOP 25 BEVERAGES MARKETS BY CHANGE IN EXPORT VALUE US$m 5 YEAR CHANGE; 07-12 1 YEAR CHANGE; 11-12

Australia $220 Australia $54 USA $95 USA $29 United Kingdom $49 Canada $10 Canada $35 China $8 China $26 Japan $4 Japan $23 Singapore $3 Hong Kong SAR $15 Papua New Guinea $3 Netherlands $13 Hong Kong SAR $3 Singapore $11 Malaysia $2 Malaysia $9 Sweden $2 Sweden $7 Germany $2 United Arab Emirates $4 South Korea $1 South Korea $3 United Kingdom $1 Papua New Guinea $3 Thailand $1 France $3 France $1 Ireland $2 Netherlands $1 Germany $2 United Arab Emirates $1 Belgium $2 Colombia $0.4 Philippines $2 Bulgaria $0.4 Latvia $1 Kuwait $0.3 Cook Isds $1 Samoa $0.3 Thailand $1 Cambodia $0.3 Norway $1 Tonga $0.2 Samoa $1 Qatar $0.2 Ukraine $1 Cayman Isds $0.1

Source: UN Comtrade database; Coriolis analysis 49 EXPORT DOLLAR DECLINE iFAB 2013 Vietnam led declining markets by value; signs European situation deteriorating in some secondary markets

BOTTOM 25 BEVERAGES MARKETS BY CHANGE IN EXPORT VALUE US$m 5 YEAR CHANGE; 07-12 1 YEAR CHANGE; 11-12

-$2.6 Viet Nam -$3.5 Viet Nam -$0.3 Estonia -$1.7 Ireland -$0.3 South Africa -$1.3 Denmark -$0.2 Bahrain -$0.7 Norway -$0.2 Panama -$0.6 Finland -$0.2 Benin -$0.6 Brazil -$0.2 Slovenia -$0.5 American Samoa -$0.1 Greece -$0.3 Indonesia -$0.1 Vanuatu -$0.3 Vanuatu -$0.1 Ethiopia -$0.2 Poland -$0.1 Barbados -$0.2 Solomon Isds -$0.1 Norfolk Isds -$0.2 Barbados -$0.1 Cuba -$0.2 Italy -$0.1 Chile -$0.2 French Polynesia -$0.0 French Polynesia -$0.2 New Caledonia -$0.0 Poland -$0.1 Philippines -$0.0 Tuvalu -$0.1 India -$0.0 Kazakhstan -$0.1 Norfolk Isds -$0.0 Czech Rep. -$0.1 Czech Rep. -$0.0 Pakistan -$0.1 Guam -$0.0 Areas, nes -$0.1 Bahrain -$0.0 Costa Rica -$0.1 Syria -$0.0 Russian Federation -$0.1 Bermuda -$0.0 El Salvador -$0.1 N. Mariana Isds -$0.0 Pitcairn -$0.1 Ukraine

Source: UN Comtrade database; Coriolis analysis 50 PERCENT GROWTH iFAB 2013 Strong growth rates coming out of a wide range of smaller markets, particularly across Asia-Pacific region

TOP 25 BEVERAGES MARKETS BY CAGR PERCENT CHANGE IN EXPORT VALUE US$m; % 5 YEAR CAGR; 07-12 1 YEAR CHANGE; 11-12

Portugal 271% Austria 3257% Timor-Leste 152% Papua New Guinea 378% Cambodia 101% Jamaica 286% Kiribati 83% Cambodia 238% Ukraine 78% Kuwait 210% China 74% Colombia 196% Colombia 63% Timor-Leste 157% Bulgaria 56% Bulgaria 110% Indonesia 54% Marshall Isds 105% Malaysia 54% Iceland 75% Malta 50% Thailand 67% Papua New Guinea 38% Qatar 65% Hong Kong SAR 36% Cayman Isds 54% Macao SAR 35% Russia 44% Austria 34% China 41% Mauritius 32% Germany 39% Solomon Isds 31% Turkey 38% Norway 30% Malaysia 27% Latvia 29% Spain 27% Qatar 28% Mexico 27% Philippines 27% Switzerland 27% Mexico 26% Samoa 25% Sweden 24% Sweden 25% United Arab Emirates 24% Singapore 21% Japan 21% Tonga 21%

Source: UN Comtrade database; Coriolis analysis 51 PERCENT DECLINE iFAB 2013 In terms of rate of decline, unstable and tertiary markets predominate

BOTTOM 25 BEVERAGES MARKETS BY CAGR PERCENT CHANGE IN EXPORT VALUE US$m 5 YEAR CAGR; 07-12 1 YEAR CHANGE; 11-12

-3% Vanuatu -48% Guam -3% Poland -52% Bahrain 5 year -5% Czech Rep. 1 year -53% Saint Lucia CAGR -8% South Africa CAGR -59% Poland -11% Chile -61% Solomon Isds -12% Costa Rica -72% Wallis Isds -17% Tuvalu -78% Czech Rep. -18% Greece -86% Viet Nam -20% Bahrain -94% Falkland Isds -29% Viet Nam -94% Curaçao -35% Estonia -100% Pitcairn -100% Macedonia -100% Zimbabwe -100% Iran -100% Vatican City -100% Ecuador -100% Afghanistan -100% Bosnia -100% Ghana -100% Myanmar -100% Antigua -100% Pitcairn -100% Serbia -100% El Salvador -100% Iran -100% Pakistan -100% Croatia -100% Kazakhstan -100% Sao Tome -100% Cuba -100% Georgia -100% Ethiopia -100% Hungary -100% Slovenia -100% Myanmar -100% Benin -100% Tunisia -100% Panama -100% Syria

Source: UN Comtrade database; Coriolis analysis 52 BENCHMARK – EXPORT GROWTH VS. COMPETITORS iFAB 2013 New Zealand delivered a good growth performance relative to key competitors; Chile appears to be the “one-to-watch” currently

TOTAL BEVERAGES EXPORT VALUE IN 2012: NZ VS. COMPETITORS US$m; 2012; 2012 vs. 2011

EXPORT VALUE 2012 1 YEAR $ CHANGE IN VALUE 1 YEAR % CHANGE IN VALUE

France $18,118 Spain $303 New Zealand 10%

United Kingdom $10,991 France $243 Chile 7%

USA $8,178 Chile $133 Spain 6%

Germany $7,079 New Zealand $117 Argentina 2%

Spain $5,545 Argentina $25 France 1%

Mexico $3,737 Mexico $11 Mexico 0%

Australia $2,245 Australia $1 Australia 0%

Chile $2,101 Greece -$5 South Africa -1%

Argentina $1,525 South Africa -$12 United Kingdom -1%

Ireland $1,503 Ireland -$93 Greece -2%

South Africa $1,331 United Kingdom -$135 Germany -4%

New Zealand $1,257 Germany -$278 Ireland -6%

Greece $314 USA -$937 USA -10%

Source: UN Comtrade database; Coriolis analysis 53 FOCUS – NZ VS. CHILE iFAB 2013 Chile is achieving strong growth in beverage export to four countries, three of which are Top 6 New Zealand markets

BEVERAGES EXPORT VALUE: NZ VS. CHILE TOP 15 CHILE BEVERAGES EXPORT MARKETS BY 1Y VALUE GROWTH VS. NZ US$m; 2011-2012 US$m; 2012 vs. 2011 -$100 -$50 $- $50 $100

China +$133 Chile driving growth Spain across four countries; $2,101 Japan three of which are important to NZ $1,968 USA Venezuela Russia Ecuador

+$117 Brazil Poland $1,257 France $1,140 Colombia Bolivia New Zealand Peru Thailand UAE

Paraguay Chile Hong Kong SAR New Zealand 2011 2012 2011 2012 South Korea

New Zealand Chile NET Other

Source: UN Comtrade database; Coriolis analysis 54 iFAB 2013 BEVERAGES – EXPORTS BY TYPE iFAB 2013 New Zealand beverages exports have achieved very strong growth in the past decade

10 YEAR NEW ZEALAND BEVERAGES EXPORT BY CATEGORY/SUPER-CATEGORY (HS4/6 LEVEL) US$m; 2002-2012 10 Year

CAGR Absolute $1,257 TOTAL 20% +$1,049m $1 Vinegar 20% +$1m $43 Spirits 6% +$20m

$1,140 $1 $45

$971 10y $0 $47 CAGR 20% $816 $1 $789 $36 $0 $722 $35 $0 $981 Wine 23% +$854m $37 $895

$524 $774 $29 $0 $454 $0 $644 $30 $637 $378 $560 $0 $35

$258 $396 $0 $332 $208 $30 $14 Cider 23% +$12m $0 $245 $23 $12 $45 Beer 18% +$36m $28 $158 $2 $10 $127 $14$2 $15 $4 $26 $82 $97 Soft drinks 13% +$68m $13$0 $0 $11$1 $16 $14 $67 $64 $67 $9 $2 $11$0 $50 $52 $55 $8 Water 13% +$6m $9 $38 $50 $6 $8 $29 $3 $3 $3 $8 $48 $6 $67 $67 Juice 16% +$52m $15$2 $16$5 $32 $24 $31 $34 $36 $38 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: UN Comtrade database; Coriolis analysis 56 EXPORT DOLLARS iFAB 2013 Bottled wine continues to be New Zealand’s largest beverage export

EXPORT VALUE OF TOP 18 BEVERAGES PRODUCTS (HS6 LEVEL) EXPORTS IN 2012 US$m; 2012

Wine, bottle $824 Wine, bulk $145 Soft drinks $66 Beer $45 Kiwifruit juice; other juices $41 Other flavoured beverages $31 Other spirits $25 Apple juice $21 Cider; other fermented $14 Sparkling wine $13 Liqueurs $11 Mineral water $6 Mixed juice $4 Whiskeys $4 Other water, unsweetened $3 Vodka $2 Rum $1 Vinegar $1

Source: UN Comtrade database; Coriolis analysis 57 EXPORT DOLLAR GROWTH iFAB 2013 In 2012, wine, beer and “other flavoured beverages” drove export value growth while water and some spirits struggled

ANNUAL CHANGE IN EXPORT VALUE OF TOP 18 BEVERAGES EXPORTS US$m; 2012 vs. 2011

Wine, bottle $64 Wine, bulk $21 Beer $17 Other flavoured beverages $14 Sparkling wine $2 Whiskeys $1 Cider; other fermented $1 Net Soft drinks $1 +$117m Kiwifruit juice; other fruit juices $1 Mineral water $0 Vinegar $0 Rum $0 Apple juice -$0 Mixed juice -$0 Vodka -$1 Other spirits -$1 Liqueurs -$1 Other water, unsweetened -$2

Source: UN Comtrade database; Coriolis analysis 58 PERCENT GROWTH iFAB 2013 In 2012, other flavoured beverages, beer and whiskey grew at the fastest rate; other water and vodka experienced strong declines

ANNUAL PERCENT GROWTH IN TOP 18 BEVERAGES EXPORTS US$m; 2012 vs. 2011

Other flavoured beverages 79% Beer 63% Whiskeys 59% Wine, bulk 17% Sparkling wine 15% Vinegar 12% Cider; other fermented 11% Wine, bottle 8% Rum 6% Mineral water 6% Kiwifruit juice; other fruit juices 3% Soft drinks 2% Apple juice 0% Other spirits -5% Mixed juice -5% Liqueurs -11% Vodka -34% Other water, unsweetened -37%

Source: UN Comtrade database; Coriolis analysis 59 $/LITRE iFAB 2013 In 2012 whiskey led in terms of export dollars per litre

VALUE PER LITRE OF TOP 18 BEVERAGES EXPORTS US$/litre; 2012

Whiskeys $9.01 Rum $4.49 Wine, bottle $3.91 Sparkling wine $3.29 Kiwifruit juice; other fruit juices $3.23 Liqueurs $3.01 Wine, bulk $2.73 Vodka $2.42 Apple juice $2.09 Mixed juice $2.00 Other spirits $1.99 Vinegar $1.63 Other flavoured beverages $1.41 Soft drinks $1.36 Cider; other fermented $1.11 Mineral water $0.84 Beer $0.81 Other water, unsweetened $0.45 Wt. Average $2.72

Source: UN Comtrade database; Coriolis analysis 60 $/L CHANGE iFAB 2013 In 2012 whiskey, rum and bulk wine achieved good price increases, while vinegar prices were down strongly

ANNUAL CHANGE IN VALUE PER LITRE OF TOP 18 BEVERAGES EXPORTS US$/litre; 2012 vs. 2011

Whiskeys $5.90 Rum $1.05 Wine, bulk $0.50 Other spirits $0.26 Mixed juice $0.25 Apple juice $0.22 Kiwifruit juice; other fruit juices $0.17 Liqueurs $0.14 Other water, unsweetened $0.13 Wine, bottle $0.11 Cider; other fermented $0.03 Other flavoured beverages $0.02 Vodka $(0.01) Soft drinks $(0.08) Beer $(0.11) Sparkling wine $(0.15) Mineral water $(0.15) Vinegar $(0.53)

Source: UN Comtrade database; Coriolis analysis 61 iFAB 2013 BEVERAGES – INDUSTRY SCIENTIFIC RESEARCH iFAB 2013 A number of research institutes are researching in the wine sector

KEY SCIENTIFIC RESEARCH ORGANISATIONS INVOLVED IN BEVERAGE INDUSTRY RESEARCH IN NEW ZEALAND (2013)

Focus & activities

- Aroma studies- geological etc. effects on Sauvignon Blanc aroma www.wineresearch.org.nz - $12m FRST funding of sauvignon blanc (with Plant and Food), Auckland and Lincoln Universities) - Conjunction with Nelson Marlborough Institute of Technology

- Chemistry research into high acid, co-ferments, yeasts, polyphenol analyses http://web.auckland.ac.nz/uoa/science/a - Pinot Noir research into aroma colour, polyphenols, soil profiles (Funding from liquorland and bout/departments/chemistry/about/subj - Sauvignon blanc programme researching aroma compounds (FRST funding $1.6m/yr) ects/winescience/research/furtherwinere Wine Research Institute search/furtherwineresearch.cfm (Dept. of Chemistry – (Wine Science Programme)

- Pest and Disease Management www.plantandfood.co.nz/page/home/lan - Viticulture production systems ding-pages/wine-industry/ - Biological controls - Applied sensors - Viticulture and Wine research (18 staff at Marlborough Research Centre) - Sensory Science - Developing fining agents from

- Focus on Pinot Noir www.lincoln.ac.nz/Research-at- - Climate and soil effects on vine growth and grape composition Lincoln/Research-centres/Centre-for- - Enhancing nature’s ecosystem services in vineyards Viticulture-and-Oenology/ - Enhancing innovation and adoption of new technologies in the grape wine sector - Sensory evaluation and psychological aspects of flavour perception

- Viticulture and Wine courses http://www.nmit.ac.nz/courses/areaofstu - Situated within the Marlborough Wine Research Centre dy/mid/12245/a/25/viticulture- wine.aspx - Sustainable farming fund http://www.mpi.govt.nz/ - others

Source: Company websites; annual reports; Coriolis 63 BEVERAGE – INDUSTRY ORGANISATIONS iFAB 2013 There are four key industry organisations representing the New Zealand beverage industry

KEY INDUSTRY ORGANISATIONS INVOLVED IN BEVERAGE INDUSTRY RESEARCH IN NEW ZEALAND (2013)

Details Website New Zealand Wine - Funded through: a levy on the sale of grapes collected by the Grape Growers www.nzwine.com Council under the Commodity Levies Act 1991; - a levy on the sale of wine collected by the Wine Institute under the Wine Act 2003; - User pays activities and sponsorships - Represent views of producers and marketers of premium spirits and liqueurs www.distillers.co.nz

- Represent views of producers and marketers of juices and non-alcoholic www.nzjba.org.nz beverages

- Represents all of the breweries in New Zealand brewersguild.org.nz

- Trans-Tasman association that represents the major producers in both markets http://www.brewers.org.au on government and regulatory matters.

Source: Company websites; annual reports; Coriolis 64 METHODOLOGY & DATA SOURCES iFAB 2013 Data was from a variety of sources, and has a number of identified limitations

This report uses a range of information sources, both qualitative and The opinions expressed in this report represent those of the industry quantitative. participants interviewed and the authors. These do not necessarily represent those of Coriolis Limited or the New Zealand Government. The numbers in this report come from multiple sources. While we believe the data are directionally correct, we recognise the limitations in Coriolis has not been asked to independently verify or audit the what information is available. In many cases different data sources information or material provided to it by or on behalf of the Client or any disagree (e.g. Statistics New Zealand vs. FAO vs. UN Comtrade). Many of the data sources used in the project. The information contained in data sources themselves incorporate estimates of industry experts (e.g. the report and any commentary has been compiled from information FAO AgStat). As one example, in many cases, the value and/or volume and material supplied by third party sources and publicly available recorded as exported by one country does not match the amount information which may (in part) be inaccurate or incomplete. Coriolis recorded as being received as imports by the counterparty [for makes no representation, warranty or guarantee, whether express or understood reasons]. In addition, in some places, we have made our implied, as to the quality, accuracy, reliability, currency or completeness own clearly noted estimates. of the information provided in the report.

All trade data analysed in all sections of the F&B Information project are If you have any questions about the methodology, sources or accuracy calculated and displayed in US$. This is done for a range of reasons: of any part of this report, please contact project lead Tim Morris at Coriolis, on +64 9 623 1848 1. It is the currency most used in international trade 2. It allows for cross country comparisons (e.g. vs. Denmark) 3. It removes the impact of NZD exchange rate variability 4. It is more comprehensible to non-NZ audiences (e.g. foreign investors) 5. It is the currency in which the United Nations collects and tabulates global trade data

65 TRADE CODES iFAB 2013 Project defines the following trade codes as beverages

GLOBAL HARMONISED SYSTEM (HS) TRADE CODES DEFINED AS BEVERAGES HS2002 HS Code Short Description Longer official description 200911 Frozen orange juice Frozen orange juice, unfermented, not containin 200912 Orange juice not-frozen unsweet Orange juice, not frozen, of a Brix value not >20, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200919 Orange juice not-frozen sweet Unfrozen orange juice, unfermented, not contain 200921 Grapefruit juice Grapefruit juice, of a Brix value not >20, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200929 Grapefruit juice Grapefruit juice (excl. of 2009.21), unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200931 Other citrus Juice of any single citrus fruit other than orange/grapefruit, of a Brix value not >20, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweet 200939 Other citrus Juice of any single citrus fruit other than orange/grapefruit (excl. of 2009.31), unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweet 200941 Pineapple juice Pineapple juice, of a Brix value not >20, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200949 Pineapple juice Pineapple juice (excl. of 2009.41), unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200950 Tomato juice Tomato juice, unfermented, not containing added 200961 Grape juice Grape juice, incl. grape must, of a Brix value not >30, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200969 Grape juice Grape juice, incl. grape must (excl. of 2009.61), unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200971 Apple juice, unsweetened Apple juice, of a Brix value not >20, unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200979 Apple juice Apple juice (excl. of 2009.71), unfermented & not cont. added spirit, whether or not cont. added sugar/oth. sweetening matter 200980 Kiwifruit juice; other fruit juices Juice of other single fruit, unfermented, not c 200990 Mixed juice Mixtures of juices, unfermented, not containing 220110 Mineral water Mineral waters and aerated waters, unsweetened 220190 Other water, unsweetened Other unsweetened waters; ice and snow 220210 Soft drinks Waters (incl. mineral and aerated), with added 220290 Other flavoured beverages Other non-alcoholic beverages, nes 220300 Beer Beer made from malt 220410 Sparkling wine Champagne and sparkling wine 220421 Wine, bottle Wine (not sparkling); grape must with by alcoho 220429 Wine, bulk Wine (not sparkling); grape must with alcohol i 220430 Grape must Other grape must, nes 220510 Vermouth Vermouth and other wine of fresh grapes, flavou 220590 Vermouth Vermouth and other wine of fresh grapes, flavou 220600 Cider; other fermented Other fermented beverages (for example, cider, 220710 Ethyl alcohol 80% Undenatured ethyl alcohol, of alcoholic strengt 220720 Ethyl alcohol any strength Ethyl alcohol and other denatured spirits of an 220820 Distilled grape wine Spirits from distilled grape wine or marc 220830 Whiskeys Whiskeys 220840 Rum Rum and tafia 220850 Gin Gin and Geneva 220860 Vodka Vodka 220870 Liqueurs Liqueurs and cordials 220890 Other spirits Other spirituous beverages, nes 220900 Vinegar Vinegar and substitutes for vinegar obtained fr Source: United Nations codes; Coriolis definitions in conjunction with project steering group 66 GLOSSARY OF TERMS iFAB 2013 This report uses the following acronyms and abbreviations

A$/AUD Australian dollar N/C Not calculable ABS Absolute change N.H Northern Hemisphere ANZSIC AU/NZ Standard Industry Classification NZ New Zealand AU Australia NZ$/NZD New Zealand dollar Australasia Australia and New Zealand R&D Research and Development b Billion S Asia South Asia (Indian Subcontinent) CAGR Compound Annual Growth Rate SE Asia South East Asia C/S America Central & South America (Latin America) S.H Southern Hemisphere CRI Crown Research Institute SS Africa Sub-Saharan Africa CY Calendar year (ending Dec 21) T/O Turnover E Asia East Asia US/USA United States of America EBITDA Earnings before interest, tax, depreciation and US$/USD United States dollar amortization FAO Food and Agriculture Organisation of the UN UK United Kingdom FY Financial year (of firm in question) US United States of America

£/GBP British pounds YE Year ending JV Joint venture YTD Year to date m Million Sources n/a Not available/not applicable AR Annual report NA/ME/CA North Africa / Middle East / Central Asia Ce Coriolis estimate Nec/nes Not elsewhere classified/not elsewhere specified Ci Coriolis interview

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